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Hur, Sewon - 2018

We study how the co-movement of inflation and economic activity affects real interest rates and the likelihood of debt crises. First, we show that for advanced economies, periods with procyclical inflation are associated with lower real interest rates. Procyclical inflation implies that nominal...

Persistent link: https://www.econbiz.de/10012910141

A Viable Insolvency Procedure for Sovereigns (VIPS) in the Euro Area

Fuest, Clemens - 2014

A mechanism to restructure the debt of an insolvent euro country is a missing element in the emerging institutional architecture of the euro area. The introduction of an insolvency proce-dure for sovereigns faces a dilemma: In the foreseeable future, its introduction would risk pushing Europe...

Persistent link: https://www.econbiz.de/10013048549

Optimal Maturity Structure of Sovereign Debt in Situation of Near Default

Rochon, Céline - 2014

We study the relationship between default and the maturity structure of the debt portfolio of a Sovereign, under uncertainty. The Sovereign faces a trade-off between a future costly default and a high current fiscal effort. This results into a debt crisis in case a large initial issuance of long...

Persistent link: https://www.econbiz.de/10013045943

Reflections on the consequences and risks of an economy's indebtedness

Milea, Camelia - In: Financial studies 25 (2021) 2, pp. 50-63

The paper aims to present some risks and consequences of the indebtedness of an economy. The article is based on the results of a research project and it describes the negative effects of a high level of indebtedness of an economy, the elements that influence the risks of an economy's...

Persistent link: https://www.econbiz.de/10012664617

Do countries default in bad times? : the role of alternative detrending techniques

Panizza, Ugo - 2022

Quantitative models of sovereign debt predict that countries should default during deep recessions. However, empirical research on sovereign debt has found a surprisingly large share of "good times" defaults (i.e., defaults that happen when GDP is above trend). Existing evidence also indicates...

Persistent link: https://www.econbiz.de/10013173175

Long-term debt sustainability in emerging market economies : a counterfactual analysis

Panizza, Ugo - 2022

The 2015 Addis Ababa Action Agenda recognized the need for policies aimed at maintaining longterm debt sustainability. This paper describes a set of commonly used definitions of debt sustainability and shows that none of them focuses on long-term debt sustainability. It then discusses concept...

Persistent link: https://www.econbiz.de/10013175072

Selective sovereign defaults

Erce, Aitor; Mallucci, Enrico - 2018

Governments issue debt both domestically and abroad. This heterogeneity introduces the possibility for governments to operate selective defaults that discriminate across investors. Using a novel dataset on the legal jurisdiction of sovereign defaults that distinguishes between defaults under...

Persistent link: https://www.econbiz.de/10011967366

Currency, Liquidity and Debt Crises

Gurdgiev, Constantin - 2008

liquidity reserves necessary to finance short-term debt services. As a result, the concept of a solvent, illiquid sovereign … debtor has generated significant literature on debt crises' links with currency and liquidity crises. In this chapter, I … consider the two major forces interacting with liquidity and debt crises: the role of self-fulfilling expectations, plus inter …

Persistent link: https://www.econbiz.de/10014219825

Is Inflation Default? The Role of Information in Debt Crises

Bassetto, Marco; galli, carlo - 2017

We consider a two-period Bayesian trading game where in each period informed agents decide whether to buy an asset ("government debt") after observing an idiosyncratic signal about the prospects of default. While second-period buyers only need to forecast default, first-period buyers pass the...

Persistent link: https://www.econbiz.de/10014120815

Avoiding Sovereign Default Contagion : A Normative Analysis

de Ferra, Sergio; Mallucci, Enrico - 2021

Should debtor countries support each other during sovereign debt crises? We answer this question through the lens of a two-country sovereign-default model that we calibrate to the euro-area periphery. First, we look at cross-country bailouts. We find that whenever agents anticipate their...

Persistent link: https://www.econbiz.de/10013310053